A decade after the rescue of Spain, the real estate sector has little to do with the one that indigested the banking entities. New players such as socimis, Sareb, funds, servicers, a smaller housing development sector and much more limited credit have brought bricks to the surface.
The vicious circle that swept away the real estate sector and part of the banking sector was clear. The entities happily granted mortgages to families and financing to developers to buy land and build. When the Lehman Brothers crash came in 2008 and the economy ground to a halt, the house of cards collapsed. Asset valuations plummeted, real estate companies could not repay loans and bankruptcies began, individuals could not meet their debts and their homes passed into the hands of banks. Failed assets filled the balance sheets of financial entities, which in turn, found themselves without resources to capitalize all that delinquency.
Since 2008, banks have drained portfolios of toxic assets worth €213.58 billionsold to funds that have been buying them at steep discounts, according to the latest report by the consulting firm Axis Corporate with data up to 2021.
Axis considers that in the hands of the banks there are still toxic assets of 80,200 million and an NPL ratio of 4.5% in the banking sector, above the average for the euro zone.
That cleanup of balance sheets has moved much of NPLs and REOs into funds. Santander has shed 38,845 million since 2015; Caixabank and Bankia another 32,045; Sabadell 23,800, and BBVA another 22,028.
On the buying side, Blackstone stands out (with the great operation called Quasar to buy from Santander) with 32,440 million, Cerberus with 26,813 million (a large part acquired from BBVA) and Lone Star with 17,070 (the acquisition of Caixa is relevant). Other names such as Oaktree, Intrum, Bain or CCPIB also stand out among the big buyers of this type of portfolio.
Since then, these funds have been in charge of draining – more slowly than expected – those assets for sale to individuals, other funds or developers. Much of this work is carried out by other actors that emerged in those years, the so-called servicers, such as Aliseda, Anticipa, Haya, Solvia, Hipoges, Altamira, Servihabitat or Lindorf, who are in charge of managing bad loans and asset sales.
In 2012, the year of the rescue, two other crucial actors in the change of the real estate sector also appeared. On the one hand, Sareb was created, the bad bank to which 50,000 million in assets of the rescued entities were transferred. A decade later, it has reduced those properties by 43% and its liabilities (which are computed as public debt) by almost 34%.
The other new protagonist born in 2012 was the fiscal figure of the socimis. These listed investment companies in the real estate market were born in the likeness of international REITs and are aimed at leasing urban real estate. They have the tax advantage of paying 0% in Corporate Tax, but in exchange for distributing 80% of the profit in dividends (which are taxed). These companies with great success in raising capital initially attracted funds with a more opportunistic profile –we must remember the scant interest in investments in those years in Spain– and lately they have a more conservative profile of long-term equity investments.
Among these companies, the two largest listed on the Ibex stand out, Merlin Properties (in which Santander entered by contributing assets from Metrovacesa) and Colonial (historic Catalan real estate company converted into a socimi). Together, the 81 listed companies have portfolios worth close to 54,000 million, according to data collected by this newspaper.
A new promoter sector
The real estate crisis was like a nuclear bomb for the highly indebted developer sector. Martinsa-Fadesa (7,200 million liabilities) and Reyal Urbis (3,600 million) were the symbol of the debacle, starring in the largest bankruptcy proceedings in history and later as the great liquidations. A large part of employment and the productive fabric disappeared and construction was reduced to a minimum. If in 2006 (maximum) more than 865,000 visas for new-build housing were requested, last year they only reached 108,318 houses, with a minimum in 2013 and 2014 with just 34,000 visas, according to data from the Ministry of Transport, Mobility and Urban Agenda (Mithma).
“The promoter sector has changed a lot. The shareholder has changed, which has ceased to be a family, since now there are investment funds”, he explains. Daniel Raven, general secretary of APCSpain, the promoters’ association. “We can see it in how the listed entities, which in the end are the most relevant companies in the sector by production, size and market share, as they are already owned by investment funds, banks and other shareholders,” he adds.
Virtually all of today’s big promoters are new names. Among the largest, the listed companies Aedas Homes (controlled by the Castlelake fund) stand out; Neinor (currently with relevant shareholders such as the Stoneshield, Adar and Orion funds), and the historic Metrovacesa (controlled by Santander and BBVA, which recapitulated it by contributing land).
The list of new players is long: Vía Célere (Värde Partners); Habitat (former family business in bankruptcy and rescued by Bain Capital); ASG Homes (from Activum SG), Culmia (from Oaktree), Árqura (from Sareb, managed by Aelca, from Värde) or Kronos. Among the family businesses, Amenabar, Pryconsa and Avantespacia (of the Jove family, former owners of the extinct Fadesa) appeared.
In 2009, an unsold housing stock of 650,000 units was accumulated, which has been reduced by 200,000 houses until the year 2020, according to Mitma data, although the promoters’ association lowers that figure, since in a large part have gone to rent. Precisely, one of the novelties that Cuervo points out in the sector is construction for lease or build to rent, an outlet for companies due to the high demand for rental.
Home sales have also recovered. Last year it was 565,000 houses, according to the INE, almost 35% more year-on-year and a maximum since 2007. Although in the mix of operations, new construction weighs much less than a decade ago, since around 115,000 units were transacted .
Another of the current differences is that promoters are no longer indebted for 65% to 80% of the value of their assets. For example, in listed companies it is much lower, around 20% or less. “Now the bank demands to have purchased the land with its own funds. Banking parameters require you to have less leverage,” Cuervo points out, “and the client also has limitations.”
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